The Cargo Letter

THE CARGO LETTER [370]
Air & Ocean Logistics - Customs Broker News
30 October 2001

Good Tuesday Morning from our Observation Deck...... overlooking the officially designated "Cargo City" area and....... Runway 25-Right, at Los Angeles International Airport, voted "Best Cargo Airport in North America".

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Michael S. McDaniel, Editor & Publisher, Countryman & McDaniel, forwarder/broker attorneys at LAX.

INDEX to The Cargo Letter:

Our Top Story: In The Wake |
Section A: Section: Trade, Financial & Inland News |
Section B: FF World Air News |
Section C: FF World Ocean News | Section D: FF in Cyberspace |
Section E: The Forwarder Broker World

OUR Top Story: In The Wake

In The Wake ......Some 50 days after the World Trade Center was destroyed, the fires still burn, and the war against terrorism continues, in the wake. May God Bless America.

AIR MODE
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• IATA director general & CEO Pierre Jeanniot, speaking at the Hong Kong Int'l Aerospace Forum this month, told delegates of potential industry losses of US$7B on Int'l scheduled services in 2001, up from estimate of US$2.5B before Sept. 11 attacks. Jeanniot said 120,000 job losses among airlines in subsequent 3 weeks took place. On a more optimistic note, he also looked forward to a recovery in 2002, pointing out that flying was still the safest form of mass transport. "I am very confident our industry will weather the storm. It will emerge, bruised but reformed & very much strengthened. But all the actors -- governments, infrastructure providers & airlines -- need to share the same vision," said Mr. Jeanniot. He stressed that in addition to more intense application of conventional airport security screening, defense against potential terrorism should consist of 2 elements: better government intelligence, & worldwide application of biometrics for security purposes.
• Washington D.C.'s Reagan National Airport, the only U.S. airport remaining closed since the attacks, began limited resumption of services Oct. 11 --- closed longer than other U.S. airports due to close proximity to the Pentagon. Operating again under extreme security measures, airport not expected to return to prior level of service. For the 1st 3 weeks, only 6 airlines are permitted to operate out of Reagan National.
• UAL Corp., parent of United Airlines, has warned that unless airline can stop its losses it "will perish" at some point next year. Statement came via a letter by UAL chairman & CEO James Goodwin who also said the airline had been losing money since before Sept. 11. UAL has axed jobs & cut its flight schedules by up to 23%. Now Goodwin himself has been axed as CEO -- new boss is John W. Creighton, member of UAL's board.
• Cargo tonnage of British airports fell by 22.2% in Sept. -- down 11.9% in the period up to the 11th -- 27.5% in the latter part of the month.
• British Airways has confirmed preliminary talks with other European airlines about new alliances prompting speculation about possibilities of future mergers. Saying that European aviation industry will have to consolidate sharply in order to survive, BA boss Rod Eddington indicated the UK national carrier was talking with a number of carriers, including KLM. Moves come following an unprecedented airline slump in the wake of Sept. 11 terrorist attacks.
• UPS Chairman Michael Eskew recently said "Our volume was down that particular week about 10%, (then) our network was down for 3 days when our planes were grounded. Each successive week it's come back ... so we've gone from 10% (decline) to 6% to 4%," he said. "We think we're getting back to pre-Sept. 11, but it's still less than we were doing last year."
• European Union (EU) says it will tackle the issue of emergency measures for the European air transport industry in the wake of Sept. 11 attacks. Including security & insurance issues. In its brief, the EU said Oct. 12 it would, however, resist allowing measures, such as direct government bailouts for national airlines considered to have already been in trouble prior to attacks. The European Commission (EC) is keen to ensure no extra competitive advantage is gained by any airline through cash bailouts by member state governments. (see our World Air Briefs section).
• Who Got What .... from the federal airline aid package -- the Air Transportation Safety & System Stabilization Act -- passed by Congress in the wake of Sept. 11 terrorist attacks -- passenger-only airlines & combined passenger/cargo airlines to share US$4.5B of the total US$5B provision. Cargo-only airlines will be eligible to share the remaining US$500M: Airborne, Inc. received US$8.8M FedEx received US$101M. FedEx has annual revenues of US$20B.
• Spanish carrier Iberia will reduce flights & staff by 10%. Spanish airports could also see tariffs raised by 10% next year to offset higher security costs.
• Delta will discontinue service to Japan in the wake of Sept 11.
• Domestic airlines in China have been given permission to impose a war risk insurance surcharge of US$2.50 per passenger on Int'l routes.
• Over 150,000 airline jobs are lost -- in the wake.

• U.S. Coast Guard information regarding current status of port security around the U.S.
  http://www.uscg.mil/safeports.
• The now famous American flag planted by New York firefighters in ruins of the World Trade Center has now been hoisted from the main mast aboard aircraft carrier USS Theodore Roosevelt CVN-71 ("The Big Stick") in the war zone. God's Speed & Fair Winds.
• Lines of Europe/Mediterranean Trade Agreement (EMTA) have slashed their war risk surcharge for Egyptian, Syrian & Lebanese ports by 50%, from US$250 per TEU to US$125 per TEU. Revised surcharge came into effect Oct. 8. EMTA said reduction comes following substantial efforts by member lines in discussion with insurance underwriters. EMTA carriers are Armada, AWS (Ellerman), CMA CGM, Contazline, Hamburg Sud, K Line, Maersk Sealand, Mediterranean Shipping Co., Navigation Maritime Bulgare, P&ON, Safmarine & Senator Lines.
• Lines of Europe/Mediterranean Trade Agreement have implemented a US$150 per TEU war risk surcharge for shipments moving to/from Israel. Europe/Mediterranean Trade Agreement carriers are Andrew Weir Shipping (Ellerman), Iscont Lines, "K" Line, Mediterranean Shipping Co., Maersk, Navigation Maritime Bulgare (Bulcon), P&O Nedlloyd, Safmarine & Zim.
• U.S. military has clamped down on information about tenders issued for tankers to carry jet fuel for its air force & marine diesel for its navy, because of security concerns, shipbrokers said Oct. 11. The tenders used to be open because of the U.S. Freedom of Information Act, but now they've invoked National Security. London brokers said they had seen relatively few Military Sealift Command (MSC) cargoes in the market. Rumors in shipping market of a MSC tender for a tanker to shift 255,000 barrels of jet from Greece to the Azores, but no loading dates stated. Shipbrokers said on Oct. 10 the U.S. military had tendered for 5 oil tankers to carry 790,000 barrels of jet fuel & 300,000 barrels of marine diesel to key military locations around the world. Tanker brokers were some of the 1st to witness signs of the U.S. preparations for reprisals in the wake of Sept. 11.
• U.S. Coast Guard has denied existence of a list of crew nationalities for deciding whether seafarers face extra restrictions. USCG issued formal denial after reports circulated suggesting that crew from Islamic countries would face being denied permission to come ashore when their ships put in to U.S. ports. Coast Guard is now requiring all ships arriving from foreign ports to include a list of all aboard as part of existing arrival advance notice provisions, regardless of flag, last port of call or the nationalities aboard. Local Captains of the Port have power to enforce additional measures as they see fit.
• U.S. based Renaissance Cruises, world's 5th largest cruise operator, has gone under following industry battering in the wake of Sept. 11 terrorist action. Ten-ship Renaissance now collapsed -- company only escaped dire financial straits 6 months ago after take over by Isle of Man-registered Malvern Maritime, which pumped in fresh cash & restructured debt. Company took delivery of the 1st ship in a major expansion program in 1998, with a string of expensive newbuilding orders.
• American Classic Voyages, which runs luxury riverboats like M/V Delta Queen & a line of cruise ships serving East Coast & Hawaii (M/V Patriot & S/S Independence) filed for bankruptcy protection on Oct. 19 -- stranding hundreds of passengers & crew -- citing losses in the wake of Sept. 11.

• Some went to the rail, as RailAmerica, Inc., world's largest short line & regional railroad operator, announced that "same railroad" carloads (including intermodal units) were 97,749 in Sept. 2001, up 2% from 95,889 in Sept. 2000.
• U.S. chemical companies are building barriers at entranceways, restricting access to facilities & scrutinizing inventories -- increasing security to prevent terrorism. As many as 76,000 tanker trucks carrying millions of pounds of hazardous cargo travel the nation's roadways daily. Recent arrests of people accused of fraudulently obtaining permits to haul such materials prompted the U.S. Transportation Dept. to ask state police & truck inspectors to conduct roadside checks. Rules to be enforced include a long-standing rule that company drivers must speak English & be a U.S. citizen at least 25 years old with previous truck driving experience & proper certification.
• U.S. railroad police forces will employ heightened patrols, inspections & surveillance, as deemed appropriate for security of shipments & facilities, while certain trains will have operations modified commensurate with security requirements. The Assn. of American Railroads will continue to operate a 24-hour command center linked to federal national security personnel & the railroads' 24-hour operations centers.

• Led by U.S. Customs, new "Operation Green Quest," will target fraudulent import/export schemes, cash smuggling, credit card fraud, & other activities that provide financial support to terrorists, with investigators from the U.S. Treasury & Justice departments, including officials from Customs, Internal Revenue Service, Secret Service & FBI. Operation will intensify their focus on "hawala," an informal money-moving system commonly used by terrorists through use of codewords, wire transfers, transborder cargo schemes & smuggling money in suitcases.
• Estimated losses in the wake of Sept. 11, courtesy of a variety of reports from industry sources & our friend Sam Ignarski of the e-zine "Bow Wave": US$15B: Physical Damage--Buildings, 4 Aircraft, Contents US$10B: Business Interruption--long lead times to come--- US$03B: Worker's Compensation US$05B: General Liability US$03B: Aviation Liability US$05B: Incurred but not yet reported.
• US$41B:Total Estimated Loss. Indeed, these are the largest claims in the history of the various sectors & redefine the notion of how truly large a "large" insured incident can be.
• Afghanistan is already excluded/restricted under all marine cargo policies. Many insurers are also now restricting shipments to/from the following destinations: Iraq and the Persian or Arabian Sea & adjacent waters including the Gulf of Oman >> Israel >> Lebanon >> Libya (including Gulf of Sidre/Sitre) >> Gulf of Aqaba >> Yemen/People's Republic of Yemen >> Pakistan >> Oman >> Syria >> Algeria >> Egypt. For example, AGF-MAT, has not insured shipments to/from these countries after Sept. 26, 2001.
• U.S. Customs Service has issued an order that would provide succession of Customs Service officers in the event of a national emergency. Delegation Order No. 01-006 prescribes which Customs officer would act as commissioner, "in the event of a national security emergency, where the commissioner would be absent or disabled. Under authority of Treasury Dept. Order No. 165, & in compliance with Executive Order 12656, the order of succession would be: deputy commissioner; assistant commissioner, field operations; assistant commissioner, investigations; assistant commissioner, finance; assistant commissioner, information and technology, assistant commissioner, strategic trade; assistant commissioner, international affairs; and assistant commissioner, regulations & rulings.
• Canada, criticized for porous borders & lax immigration laws, announced plans on Oct. 12 to tighten security, promising to hire extra immigration officers, detain more asylum seekers & issue new residents hard-to-forge identity cards. Canada will also provide armed air marshals from the Mounties for flights by Air Canada to Washington's Reagan National Airport. The U.S. insisted that any flights into Reagan National, located close to the White House, carry armed marshals but Canada has refused the idea for Canadian flights in general.
• U.S. agencies have radically tightened security along 2,000 mile (3,200 km) border with Mexico. Inspectors began stopping every vehicle, questioning drivers & searching wares before allowing passage. The strict new controls & waiting lines of up to 5 hours -- combined with fears of fresh attacks -- prompted many Mexicans to rethink the border crossing. Official figures show that the number of illegal migrants, as well the flow of cocaine & other narcotics, has slowed sharply in the wake of Sept. 11.
• Hong Kong's exports fell 11% in Sept. -- biggest drop since Dec. 1998 -- government said territory's trade was sure to suffer more as the full effects of Sept. 11 on the U.S. are felt.

• "Tell It To The Marines" -- our The Cargo Letter page - "A National Symbol Points The Way From Sept. 11." Also a roster of U.S. Military loss at the Pentagon.
  www.cargolaw.com/2001nightmare.sept.11.01.html.
• The Black Day - 911.
  www.theblackday.net.
• American Red Cross.
  www.redcross.org.
• Dept. of Defense Response to Anthrax.
  www.anthrax.osd.mil.
• NY Insurance Dept. -- updates of WTC claims filed so far. Latest statistics shows 8530 commercial claims & 6,274 claims totaling US$5.22B.
  www.disasterinformation.org.
• Security Magazine Daily News Service

www.securitymagazine.com/lexnex/lexten.asp.

OUR REGULAR NEWS -- IS BELOW --

Please click below for other sections:
Our Top Story: In the Wake |
Section A: Section: Trade, Financial & Inland News |
Section B: FF World Air News |
Section C: FF World Ocean News | Section D: FF in Cyberspace |
Section E: The Forwarder Broker World

The Cargo Letter Correspondents:
Michael S. McDaniel, Esq., Editor (Countryman & McDaniel).
Cameron W. Roberts, Esq. (Countryman & McDaniel).

Written from wire stories, the Associated Press, Reuters, Hong Kong Shipping News Lloyds & other world sources.